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(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1. The   petitioner   has   imported   a   consignment,  declaring   it   as   Biodiesel.   The   Customs  authorities   refused   to   permit   release   of   the  goods for various reasons, upon which the present  petition has been filed.

2. At the outset, brief facts may be noted;   The petitioner is a Company registered under  the Companies Act and is engaged in the business  of   import   and   trading   in   edible   oils.   The  petitioner   had   placed   an   order   with   British  Petroleum Singapore Pte. Limited at Singapore for  5000  Metric  Tonnes   of Biodiesel,  which  would  be  supplied   as   a   blend   containing   not   less   than  30.1%   and   not   more   than   35.0%   of   Biodiesel  meeting   the   Indian   Biodiesel   Specifications   and  not   less   than   65.0%   and   not   more   than   69.9%  diesel   meeting   Bharat   Stage   IV   Diesel  Specifications.   Such   goods   were   shipped   from  Singapore   on   04.06.2018   and   arrived   at   Kandla  Port   in   the   middle   of   June   2018.   On   15.06.2018  the   petitioner   filed   the   Bill   of   Entry.   The  Customs authorities processed such Bill of Entry  and   also   cleared   the   goods   upon   payment   of  applicable   Customs   Duty,   Integrated   Goods   and  Service  Tax ("IGST"  for short)   and other  Taxes.  However, while the petitioner was in the process  of clearing the goods from the bonded Warehouse,  the respondents intercepted and prevented further  clearance   of   goods,   after   the   petitioner   had  cleared   approximately   223   Metric   Tonnes   of   the  liquid.

4. The   petitioner   thereupon   filed   the   present  petition.

5. According   to   the   petitioner,   the   imported  material   is   Biodiesel,   which   is,   as   per   the  prevailing   import   policy   free   for   import.   The  petitioner   had,   in   fact,   written   to   DGFT   on  13.06.2018 seeking clarification in this respect.  It   was   conveyed   by   DGFT   on   the   same   day   that  Biodiesel,   as   described   under   38260000,   is   free  for   import.   The   petitioner   points   out   that  Chapter 38 of the Tariff ITC (HS) contains EXIM  Code   38260000,   which   pertains   to   "Biodiesel   and  mixtures   thereof,   not   containing   or   containing  less than 70% by weight of petroleum oils or oils  obtained from bituminous minerals" and as per the  Import   Policy,   the   import   thereof   is   free.   The  petitioner   further   points   out   that   such   goods  are,   even   today,   freely   allowed   to   be   imported  and   cleared   by   other   Ports   in   the   country.   Our  attention was drawn to the impugned communication  dated 09.07.2018 of the Joint Director, in which  two   objections   were   raised   to   the   clearance   of  goods;   (i)   that   the   import   of   Biodiesel   is   not  allowed under the National Policy on Biofuels and 

(ii)   that   the   IGST   rate   would   be   18%   and   the  product   would,   in   any   case,   invite   IGST   at   a  higher rate than discharged.

6. The   respondent   nos.2   &   3   have   filed   an  affidavit   dated   18.07.2018,   in   which,  principally,   two   grounds   have   been   raised;  firstly, that Biodiesel is not free for import as  per   the   present   policy   and   secondly,   that   the  Department   has   received   a   complaint   suggesting  that under the guise of Biodiesel what is being  imported is High Speed Diesel ("HSD" for short).  The authorities have, therefore, sent the sample  of goods for Laboratory testing to verify whether  the same is Biodiesel or HSD. 

7. Having heard learned counsel for the parties  at   considerable   length   and   having   perused   the  documents on record, what  prima facie  emerges is  that   the   petitioner   had   placed   an   order   for  supply of Biodiesel. The specifications thereof,  as noted, were that the product would contain not  less   than   30.1%   and   not   more   than   35.0%   of  Biodiesel   meeting   the   Indian   Biodiesel  Specification.  Correspondingly,  it would  contain  not   less   than   65.0%   and   not   more   than   69.9%   of  Diesel   meeting   the   Bharat   Stage   IV   Diesel  Specifications.  British  Petroleum  Singapore  Pte.  Limited,  which  supplied  the said  product   to the  petitioner,   also   provided   necessary   Certificate  in   this   respect.   Once   the   product   arrived   in  India, the petitioner also supplied a Certificate  of the local Laboratory, which specified that the  Biodiesel content in the product was 34.81%(V/V).  In   other   words,   the   product,   other   than  Biodiesel, be it HSD, was at any rate, less than  70%.